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GAME DEVELOPER INDEX 2011 SWEDISH GAMES INDUSTRY’S REPORTS 2012

Pic: (in development), Southend Interactive TABLE OF CONTENTS

EXECUTIVE SUMMARY 2 YEAR OF REGISTRY 12

WORDLIST 3 GAME DEVELOPER MAP 13

FOREWORD 4 REVENUES OF FREE-TO-PLAY 14 Example 14 TURNOVER AND PROFIT 5 CPM 15 eCPM 15 NUMBER OF COMPANIES 7 NEW SERVICES, NEW PIRACY 15 NUMBER OF EMPLOYEES 7 THE VALUE CHAIN 16 GENDER DISTRIBUTION 8 FUTURE 16 TURNOVER PER COMPANY 8 WORLDWIDE 17 EMPLOYEES PER COMPANY 8 International Expansions 18

BIGGEST PLAYERS 8 GAME SALES 19

DISTRIBUTION PLATFORMS 8 AVERAGE REVIEW SCORES 20 New Technology 9 10 INNOVATIONS IN MARKETING 21 Outsourcing/Consulting 10 Specialized Subcontractors 11 CONCLUSION 22

DLC 11 METHOD 22

LOCATION OF COMPANIES 12

1 | Game Developer Index 2011 EXECUTIVE SUMMARY

Game Developer Index analyzes Swedish game developers’ activities and international industry trends of the past year by compiling key figures from the respective companies’ annual reports. Swedish game development is an export industry and acts on a highly globalized market. The game industry has in a couple of decades grown from a niche embraced by enthusiasts to a global industry with a considerate cultural and economic impact. Game Developer Index 2011 compiles Swedish game developers’ annual reports for their latest fiscal year. In short:

• Swedish game developers nearly double their turnover in 2011, amassing a 96 % growth to a total of 257 million EUR.

• The majority (60 %) of companies are profitable and the industry reports a combined profit for the third year in a row.

• Employment increases by 26 % to a total of 1 512 employees, also a record breaking number.

• The number of female employees increases by 74 %, resulting in 14 % of total employees.

• For the first time ever, the total turnover and employment rate is greater for companies developing games for than those developing games mainly for retail.

• The compound annual growth rate (CAGR) for Swedish developers between 2006- 2011 is 29,26 %

• An addition of 39 companies results in 117 active developers in 2011

• The number of companies with a turnover between 200 000 and 5 million EUR increased by 72 %

• Swedish game developers are renowned for their diversity and high quality. has world leading developers within several fields of game development: AAA, digital distribution, social games and mobile games.

By all accounts Swedish game developers will continue their growth in 2012. Thanks to digital distribution, an ever-increasing amount of developers self-publish, foreign players such as Rovio and Ngmoco have opened Swedish offices and several companies, big and small, are growing rapidly. The two greatest challenges for continued growth are skills supply and financing.

Game Developer Index 2011 | 2 GLOSSARY

AAA: Refers to big budget video games, and is generally associated with a high level In-app Purchase: Real money-purchases conducted within a game, rather than an of quality. These games are usually published by the industy’s biggest publishers, external payment system. Items usually bought consist of new levels, equipment, mainly via physical distribution. experience points etc.

Alpha: The first phase to begin testing in a game’s release life cycle. Indie: Derived from ”independent”. Signifies game productions by independent developers; normally small companies with only one or a few number of employees. Beta: Follows Alpha. This phase is typically the first time that the software is Indie has in recent years signified the emerging stream of smaller developers that available outside of the company that developed it. External users are called beta have been able to reach a wider audience thanks to digital distribution, which has testers. made many independent productions financially viable.

Casual Games: Games targeted at a mass audience, typically distinguished by MARPPU: Monthly Average Revenue Per Paying User simple gameplay, short learning curves and being played for shorter sessions at a time. MARPU: Monthly Average Revenue Per User

Cloud Gaming: Also known as gaming on demand, is a type of online gaming that MAU: Monthly Active Users allows streaming of games onto a computer while the actual game is stored on the game company’s server. This allows access to a game without the need of a console Middleware: Computer software used for game development. Middleware acts as and largely makes the capability of the user’s computer obsolete, as the server runs “glue” between two existing software components. the processing needs. Micro Payments: A financial transaction that involves a small sum of money and CPM: Cost per mille usually occurs online. In the games industry, the term is normally used to describe payments of DLC or in-app purchases. Crowdfunding: Raising funds by crowdsourcing. In recent years, this phenomenon has been prominent on different web platforms that collects co-funding support from Off-shoring: International outsourcing the public. On-shoring: National outsourcing Crowdsourcing: Outsourcing tasks to an undefined public rather than paid employees. Outsourcing: Contracting out of a business process to an independent organization from which the process is purchased back as a service. DAU: Daily Active Users Serious Games: Games with a primary purpose other than entertainment. This Digital Distribution: Sales of digital software through digital channels often involves simulation software, exercise games, games for learning, and advergames. DLC: ; Game add-ons, usually of a smaller scale than classic “expansions”. : Mobile phones with advanced computing abilities built on a mobile operating system. Popular examples are the iPhone and Samsung Galaxy. eCPM: Effective cost per mille Social Games: Games on social networks such as Mobage or . Freemium: A business model by which a game is provided free of charge, but requires payment for advanced features or virtual goods. Streaming: Direct access of digital material as it is being transferred on the internet.

Free-to-play/Free2play: Any video game that has the option of allowing its Tablet: A mobile computer primarily operated by touching the screen. Examples are players to play without paying. Revenues are usually generated by ads or fees for the iPad and Galaxy Tab premium content instead. Virtual Goods/Items: Non-physical goods for use in video games, usually Gaming: The act of playing video games. A word that is commonly used within the weapons, clothing or other apparell. video game culture to describe one’s hobby. A person is called a “”.

3 | Game Developer Index 2011 FOREWORD SWEDISH GAMES INDUSTRY STRONGER THAN EVER

2011 was another record year for than the previously dominant AAA latter primarily for smaller and Swedish video game developers studios. That being said, it’s not emerging companies. The long and Swedish video game export. synonymous with AAA developers term requires a better skills supply As if record numbers of having bad businesses, quite the (research, education, training, employment, turnover, profit contrary; 2011 was a very good internationalization, foreign and female employees were not year for many AAA developers specialists etc.) and equal terms in enough, 2011 also marked the and the outlook for the launch international competition largest increase ever in several of of the next generation of video regarding funding and public these areas. The success largely game consoles is very promising. subsidies in order for Swedish depends on individual game companies’ sensational companies’ achievements, not 2011 was the year when the development to continue. least -developer Mojang, Swedish game phenomenon who with a turnover exceeding managed the transition from , September 2012 50 million EUR in the company’s the AAA paradigm to the new Per Strömbäck, Spokesperson, first year, became Sweden’s market for digital services without Swedish Games Industry biggest game developer in terms sacrificing quality, profitability of revenues. Several other or international competitiveness. developers have also had an AAA games still have an outstanding development. The important role on the global structural transformation from market and Sweden is fortunate in AAA games sold at retail to having several successful games for digital services online, companies in both categories. in social media and mobile phones, is in full effect, and for Future challenges include finding the first time companies adhering adequate talent and funding, to the latter present a greater t whereof the first is a limitation for urnover and employment rate established companies and the

The Hunter, Expansive Worlds

Game Developer Index 2011 | 4 TURNOVER AND The number of women increased by employment among game 74% totaling 212 positions, developers focusing on digital PROFIT approximately 14% of the total number channels is greater than Swedish video game exports almost of employees; an all-time high, and developers who produce games mainly doubled in 2011, a landmark a proportional increase of more than for retail. The combined sales value achievement for Swedish video game 40% compared with the previous year. however is still greater for developers. The accumulated growth traditional distribution, mainly because has never been greater, as the industry What measures then, lie behind this the average price is higher and in has gone from a turnover of 131.2 remarkable growth? In recent years, some cases due to larger volumes, but million EUR in 2010 to no less than the video games industry has since the supply chain is more 257.4 million EUR in the following undergone a major overturn to digital complex the proportion of the year. distribution. From being dominated by developer’s revenue is smaller boxed sales via traditional mortar-and- compared to digital sales which also The combined profit increased by more brick stores, digital distribution have the advantage of fewer middle- than 700% to 14.2 million EUR, and a channels on mobile phones, social men. majority of the companies are networks and various online venues profitable. Employment increased by has substantially increased. For the To continue to deliver successful games 26% to a record total of 1512 people. first time ever, the total turnover and in both traditional AND digital sales

TURNOVER PROFIT

300 M€ 15 M€

10 250

5

200 0

150 -5

-10 100

-15

50 -20

0 -25 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

EMPLOYEES GENDER DISTRIBUTION

2000

1500 KvinnorWomen

MänMen

1000

500

0 2007 2008 2009 2010 2011

5 | Game Developer Index 2011 KEY FIGURES 2011 2010 2009 2008 2007 2006 N:o of Companies 117 (+10%) 106 (+5%) 101 (-3%) 104 (+14%) 91 (+34%) 68 Turnover 257.4M (+96%) 131.2M (+22%) 107.4M (-17%) 128.7M (+21%) 106.6M (+49%) 71.3M T.O per Employee 170. (+56%) 109.1K (+12%) 97.4K (+3%) 95.1K (+3%) 92.3K (+5%) 87.8K Profit 14.2M (+747%) 1.7M (-59%) 4.1M (+120%) -20.9M (-1121%) -1.7M (+33%) -2.6M N:o of Employees 1512 (+26%) 1203 (+9,2%) 1102 (-19%) 1353 (+17%) 1153 (+42%) 813 Men 1300 (86%) 1082 (90%) 993 (90%) 1217 (90%) 1034 (90%) 702 (86%) Women 212 (14%) 121 (10%) 109 (10%) 135 (10%) 119 (10%) 107 (14%)

All numbers in € channels is a feat of strength and an developers worldwide. Another of 2012 – the year following the important prerequisite for the continued recipient of the award is Tarsier release of export success Battlefield .3 growth of Swedish game developers. Studios, which through a 467-percent Last year’s Index-newcomer growth over the past three years .com continues, like most of the A single company is alone responsible managed to snatch the Blekinge largest companies, to grow and break for half of the increase in turnover, a Gazelle of the Year award, as well as new ground. They are currently second sensation in itself. In its first annual the industry’s own appointed only to Zynga as the biggest developer accounts, Mojang adds over 50 Developer of the Year. Tarsier’s of Facebook games. million EUR to the calculations. Mojang is the developer that came This year’s big newcomer is spelled from nowhere and in record time Stardoll, a company that develops created a game that became a and operates the web-based fashion cultural, social and economic game of the same name. The game’s phenomenon. The studio’s first title, the concept is based on paper dolls and is internationally acclaimed Minecraft, mainly targeted toward girls. Stardoll has hardly gone unnoticed. The game had over 124 million users in 2011 was launched as a purchasable alpha and brings over 20 million EUR to the as early as 2009, then a one-man industry’s combined turnover. Stardoll project by studio co-founder Markus has previously not been included in the Persson. The beta version was report, but as the service developed, released in the following year, to gaming elements became clearer, and officially launch in November 18, since 2011, Stardoll is a member of 2011 during grand festivities at the trade association. Mojang’s very own convention: Minecon, in Las Vegas. Minecraft is Along the year, Illuminate Labs merged sold only through digital channels and with its owner company, Software has been on sale during most of its giant Autodesk, and is therefore no development stages in different price longer included in the report. The ranges. In addition to PC and Mac, business however, continues as an Minecraft was subsequently upcoming game, LittleBigPlanet on PS in-house studio. Another developer released on Android, iOS and Vita, was additionally awarded with involved with high-quality middleware Live Arcade. Best Motion Game during 2011, is the animation studio Imagination beating industry giants such as The Studios. They have worked with Mojang is nevertheless not alone in Legend of Zelda: Skyward Sword. developers such as DICE, Remedy and enriching Sweden’s vibrant video IO Interactive, and doubles its turnover game fauna. Far from it. Hansoft, With a growth of 74 percent in 2011, to over 2.2 million. leading developer of software for agile continues both development projects, was rewarded developing and publishing games and Unlike previous years, this report with the prestigious Uppland Gazelle has extensive expansion plans for the covers the total turnover of companies of the Year* award for a second future. Massive is working on (including, for instance, other consecutive year. Hansoft has some of the industry’s heaviest operating income) rather than just broadened its operations to include franchises and the online venture sales. This has resulted in an increase sectors outside game development as Uplay. DICE, long since the biggest of approximately 6.1 million, or well, but is still close to the industry, player in Sweden, continues to grow, roughly two percent of the total working with several highly recognized and more is to come with the accounts turnover.

*Gazelle of the Year is awarded by Swedish paper Dagens Industri

Game Developer Index 2011 | 6 following a couple of year’s gradual needed not only for the production of The combined profit also results in a decrease in activity. A majority of blockbuster titles such as Battlefield ,3 new record. Profits have previously newcomers are start-ups from 2010 Syndicate or Far Cry 3, but also for the varied greatly from year to year, but and 2011, but some include former continued development, support and 2011 was the third consecutive year web- and advertising agencies who innovation of mobile and social games with an overall positive result. changed their operations to primarily by the likes of King.com, or gaming Approximately 60 percent of focus on video games and related services/communities such as Stardoll. companies reported numbers in the services. What these companies can black, which is 10 percent greater turn into a strength is long experience For many larger developers within the than in 2010. within a closely related business, so called AAA segment, the number of where they have had customers and employees may vary slightly from year Come to profits, Mojang has a large industry relations for several years. to year. This is because they mainly part in the success with a profit of Their experiences range from design, work on commissioned jobs with a few 5.32 million EUR (approx. 37% of the programming and 3D animation to larger projects where a part of the industry total), but an ever increasing server solutions and other related employed workforce only stays on amount of developers do their share. middleware. during its respective project. In 2011, Start-ups initially focused on digital both Avalanche and Massive increased business models have in many cases Many of the newly registered their numbers by 30 employees each. been able to achieve positive results companies in 2011 show small figures That mid-sized developers such as from day one. This is in large part due with broken financial years since their Tarsier are growing is also very to the shorter production cycles that businesses just got started. 2012 will important for the industry. They double mobile and online games constitutes, present their first full-year accounts. their workforce to 38 people. and consulting work for major developers or other companies. This MachineGames is back in a new outfit allow developers to potentially reach and provides no less than 34 out faster to their target audiences, employees to the total. The studio is and makes it simpler to manage owned by American ZeniMax Media, project costs and revenues. parent company of distinguished game publisher (known Sweden’s GDP growth was 3.9 percent for the popular Elder Scrolls series). in 2011 (NIER). The compound annual growth rate between 2006-2011 Individuals are by and large a for Swedish video game developers company’s most important resource. was a staggering 29.26 percent, i.e. As the industry’s development of almost eight times greater than the self-publishing and growth continues, overall economy. Video game export many studios emphasize the necessity is no longer simply a business for the of hiring staff outside of the most future, but has real importance for the immediate needs of developing talent. Swedish economy. These occupations often concern NUMBER OF marketing, accounting, support, testing, and especially, human NUMBER OF EMPLOYEES resources. COMPANIES In 2011, the number of employees Following the financial crisis, the increased by 26 percent, more than As in many other countries, there is a numeral growth of Swedish developers 300 full time jobs. This is almost 12 clique of Swedish developers that do stalled. In 2008-2010, the studio count percent greater than the previous not have any ambitions to exceed a ended at just above 100 companies. record year of 2008. Previously, the small number of employees. Come 2011, the trend has reversed to annual increase or decrease in number Profitable results are obviously still in resemble the establishment rate before of employees has principally been focus, but these companies rather the crisis. 39 new companies have decided by a token few of the biggest outsource their needs than hire more emerged, which with deductions for developers. To a large extent, this still personnel. The reasons for this may companies that disappeared, results in rings true, but an increasing amount of vary, but a common denominator 117 active game developers. mid-sized developers are growing and is a desire to keep the feeling of a Companies that fell short reflect no for the first time ever more people were small, cohesive company. This lies in dramatic bankruptcies. The vast employed by studios working mainly stark contrast to the trend before the majority consisted of older companies with digital distribution than traditional financial crisis of 2008, when focus that organically seized production retail. A large work force is evidently relied mostly on major publishers’

7 | Game Developer Index 2011 TURNOVER PER COMPANY EMPLOYEES PER COMPANY

>50>5M: miljoner 9 >50>50: 7

>1-5M:>10-50 17miljoner 21-5021-50: 6

>2-10 miljoner >200K-1M: 38 11-2011-20: 12

1-2100-200K: miljoner 10 5-105-10: 24

>1<100K: miljon 43 0-40-4: 68

*For convenience, Turnover per Company intervals have been converted by 10 SEK = 1 EUR. For more details on currency conversion, see Method. large, internal development teams. A growing number of independent developers have come to characterize TURNOVER PER EMPLOYEES PER the emerging industry in the wake of the crisis. This occurs in symbiosis with COMPANY COMPANY new business models and the widely There is an interesting development in The average number of employees has accessible technological advancement terms of turnover per company. not changed dramatically in 2011, of , tablets, cheaper Developers with a turnover of less than with the exception of a small increase competitive graphics engines, 100K EUR* decreases marginally, but in firms with 20 to 50 or more staff programming modules and libraries, given that the total number of compa- members. This reflects the general as well as the enormous social- and nies is increasing, it is a clear sign that growth of the industry. 23 companies casual games market. many start-ups make early revenues. have no employees. Similarly, the number of companies with a turnover of 100-200K halved – GENDER not because of recession, but strongly BIGGEST PLAYERS improved businesses – and companies In accordance with 2010, the five larg- DISTRIBUTION with revenues between 200K-5 million est companies account for 60 percent The skewed gender distribution among have increased significantly (72%). of the industry’s total turnover. Worthy game companies’ staff is a long- Meanwhile, the biggest developers of notion is that no company in the standing problem, but in 2011 the continue to grow. The strength of top five now has less than 10 million number of women plummeted by over Swedish developers is partly the rapid EUR in turnover. Similarly, none of the 70 percent. The proportion of women adaption of digital sales channels, companies with the biggest staffs have in the total number of employees has without losing ground in the AAA less than 100 employees. This is a remained steady at 10 percent for model. New companies have almost big change from previous years, not several years, but 2011 saw the exclusively established themselves least given the fact that the five largest proportion increase with over 40 digitally, while large companies such companies alone account for almost percent to an approximate 14 percent as Avalanche and DICE gradually 47 percent of the Swedish developer share. That is more than twice as many expand their offerings to include both workforce, compared with 53 percent as in the UK games industry. Still, digital and physical channels. PwC in 2010. The number of employees women make up a small percentage of estimates that global spending on has thus been distributed more evenly industry employees, but 2011 marks a digitally distributed games with down- among a larger number of companies, much-welcomed trend. The highest loadable content, online games and despite the overall increase. Even proportion of women is found in mobile games will exceed physically though it is a very small number of King.com and Stardoll, both of which distributed games as early as 2013. companies that account for the bulk of develop online games. In a report by NPD (Q2 2012 Games sales and employment, and thus affect Market Dynamics: U.S.), digital sales the combined result, it proves that already accounted the bulk of every developer matters for Swedish revenues. game development in general.

Game Developer Index 2011 | 8 BIGGEST PLAYERS Turnover M EUR BIGGEST PLAYERS N:o of Employees 1. Mojang 61.2 1. DICE 237 2. DICE 42.1 2. Ubisoft Massive 148 3. Stardoll 22.3 3. Avalanche Studios 119 4. Paradox Interactive 15.9 4. Stardoll 115 5. Avalanche Studios 12.7 5. Starbreeze 105

Serious Specialized PC Console Mobile Online Games Subcontractors

40 This is not a precise summary

36 of the distribution platforms 35 34 (PC, console, mobile etc.) the developers are working with. 30 30 Consulting: It gives a good picture of the 28 8 platforms being used by

25 seeing what the develop- 22 ers have done recently and Other: 20 10 what they are working on right now. A developer can 15 be present in two or more columns in the extent that they Technology: 10 12 have focused on several 7 different formats.

5

0

DISTRIBUTION Not surprisingly, mobile and online NEW TECHNOLOGY are among the most common platforms More game developers are now focus- PLATFORMS to develop games for, particularly on ing on Android, and a lot of them Despite doomsday headlines from smartphones. From being completely publish their games on Appstore and several directions, PC development is dominated by games on Apple’s iOS, both. Although Android perhaps stronger than ever in Sweden. the market has slightly changed in does not differ significantly in terms PC is very convenient for self-publish- 2011. Smartphones with an Android of technological content being viable ing. Other platforms often have operating system has about 50 percent compared to iOS, it has been found different kind of intermediaries which of the market share (compared with that Android devices reach a more add various values such as marketing iOS’ 25 percent). However, market targeted audience than iPhone’s wider or financing but also make demands share is not proportionate to the user base. According to a study by and take a greater share of the popularity of the format’s games, Nielsen, Android’s main proprietors revenue. PC has in recent years which are purchased through Google are adults aged 25-43, which in become the obvious market for smaller, Play (formerly Android Market). turn can provide developers with a independent game developers. There Studies also show that iPhone users wider scope for a launch across more are, however, intermediaries of are much more likely to pay for content platforms. different types on the PC market as than people with Android phones. The well. number of developers that only make The iPad and other tablets have led games for Android is only a quarter to a power injection for mobile game compared to iOS. development. Many view tablets as

9 | Game Developer Index 2011 Syndicate, Starbreeze a whole new category of computing devices with great potential. It is plausible to think that iPad’s success has tempered ’s saturation rate. The tablet has made way for a wider development on iOS where developers either convert their iPhone games to a high definition format or focus completely on the tablet market. Tablets are, unlike smart- phones, basically synonymous with Apple’s iPad, whose market share exceeds 60 percent. For developers, the trend of developing mobile games solely on iOS will last as long as the customer base proves affluent in comparison to Android or Windows.

Amazon’s Kindle Fire is another potential competitor on the tablet market. King.com has experimented with game development on the format, but the Kindle has as of yet not been branded as a gaming platform. RIM, developer of Blackberry, has also tion is not whether they will play on instigated an ambitious venture into OUTSOURCING AND a smartphone or a computer, the fact the tablet games market, but if game is rather that many people use both. CONSULTING developers adapt more formats in the Outsourcing has become a rapidly According to a US study by Nielsen, following year remains to be seen. growing niche among game the number of consumers using more developers. A lot of game productions than one platform increased by seven The financial services company require specific skills or extra staff percent in 2009-2011. Morgan Stanley forecasts that the use during certain parts of a project. It is of smartphones and tablets will grow then common to hire personnel from by 350 percent in 2011-2015. Smart- CLOUD GAMING other companies. For some developers, phones are on their way of becoming Also known as gaming on demand, a majority of operations consists of an indispensable standard for the cloud gaming is a type of online consulting other companies. For others, entire world’s population, making it an gaming that allows users to access a especially smaller developers, it gives obvious market for game development specific game by streaming its content a good chance to practice skills and and advertising. to a computer directly from a server. get the business going whilst investing This means that you can play basi- in new games of their own device. This AAA game development for consoles cally any game at any time without the flexibility is important for the industry’s is on a stable level in Sweden, but need of a dedicated games console. It efficiency and thus Sweden’s most studios develop games for the largely makes the computer’s capabil- competitiveness. It is part of the consoles’ digital marketplaces. These ity obsolete, since servers perform the explanation for the strong growth in games can often easily be converted calculations in the PC’s place. In other 2011. and published via PC’s through words, it becomes more important to services like , or have a fast internet access. Despite Examples of Swedish companies GamersGate. An overall trend for that cloud gaming is more of a outsourcing are Doctor Entertainment, physically distributed console games is distribution method than a gaming who helped Starbreeze in the develop- an increased focus on bestsellers. The platform, it’s a growing part of the ment of Syndicate, and Mojang who market has consolidated to promote video games market. It is in this hired Scottish for the titles with high production costs and context worth mentioning that development of Minecraft on XBLA. large marketing budgets. acquired the world’s largest cloud has acted consultant to gaming service, , in July 2012. companies such as and paradox A growing number of households and Interactive. Its subsidiary Bitsquid has consumers are using more than one with its graphics engine of the same gaming unit (cross platform). The ques- name tied some ten ongoing game

Game Developer Index 2011 | 10 productions to the technology, SPECIALIZED acquired Swedish Illuminate Labs in including Swedish Zeal Game Studio’s 2010, who develops technology for A Game of Dwarves and UK SUBCONTRACTORS the illumination of interactive As the industry matures, the degree of developer for future environments. specialization increases, and several titles like the upcoming Swedish companies have successfully Abe’s Odyssey HD. established themselves in different DLC niches as subcontractors to other game A challenge with outsourcing for the DLC is short for downloadable content developers. These include project Swedish games industry is to keep and consists of digitally downloadable management tool-provider Hansoft, on-shoring at a high level – to a large additions to a video game. They vary and that streamlines extent outsource tasks to other in terms of size and often comprise graphics production by mesh baking. Swedish game developers. In the UK, new levels, characters, items or The examples are numerous. This 86 percent of developers use missions. They differ from classic development opens up new business outsourcing, mostly for graphics, “expansions” by in relation to these opportunities, as it will also be animation and programming. 51 per- tending to be shorter, less extensive, possible to work with companies cent of these services consist of and not being sold at retail. outside of the gaming industry which, on-shoring (source: TIGA). for example, Hansoft successfully did DLC is part of the digital market’s with customers such as Boeing. It has ”long tail”, i.e. a business structure that also led to foreign investments in makes it viable to increase revenues Swedish companies; Autodesk by widening a product’s appeal. The

INDUSTRY EXPERTS #1 The market is changing rapidly, we’re moving from traditional boxed products to digital services. Digital distribu- tion is snowballing on PC and we’re also seeing consoles focusing more on digital. The accessibility through smartphones, tablets and social networks have showed the potential to reach a broader group of players in a con- venient way. Cloud gaming could extend that by taking the immersive experience of so called AAA games to a broader audience without barrier-to-entries such as an expensive console or large chunks of data that needs to be downloaded before playing. It’s compelling to see if the combination of smart-TV and cloud gaming can be the key to the next big growth within games, or if the tablets take the natural position in the home and simply stream AAA content to the TV. However, irrespective of business model or distribution, content will still be key. Deliver outstanding games and the players will rejoice. I believe we can see that diversity and quality in Sweden, no matter if it’s triple AAA such as Battlefield or Just Cause, unique indie sensations such as Minecraft, mobile excellence in Anthill, the casual games from King.com or the evergreen “folkhem” classic Backpacker. - Martin Lindell, Acquisitions Manager, PanVision

Tarsier has developed DLC for LittleBigPlanet and is now working on a PS Vita version of the game

11 | Game Developer Index 2011 demand curve of a product is storage costs, it becomes profitable DC Comics, Dreamworks, Media extended with new material, parti- to invest in small, niche-like products Molecule and Marvel. Arrowhead’s cularly proven effective for games that that enhance and extend the gaming fantasy adventure , which cost small amounts to begin with. This experience for the most loyal players. has sold more than 1.3 million copies, has represented a larger portion of the This lies in contrast with physical sales, has sold over four million DLC bundles proceeds of several game developers where shelf space traditionally go to of which the most popular sold half a since the digital distribution boom products that are early deemed to have million on its own. Paradox Interactive around 2008. The total value of these bestseller potential. has opened a new development team small revenues or “micro-trans-actions”, in Skövde, specializing on developing may in some cases be equal to or even There are plenty of Swedish developers DLC to the studio’s various game titles. exceed the value that would traditional- who produce DLC to various extents. DLC is also released for Minecraft on ly be considered a bestseller. Without Tarsier has developed DLC for Disney, .

LOCATION OF COMPANIES Below is a table of the largest municipalities ranked by number of employees and number of companies. It is worth mentioning Skövde at sixth place, which is a rapidly growing region with 11 companies (9.4 percent of total) and 43 employees (2.8 percent of the total) in 2011.

MUNICIPALITY Employees % of total Companies % of total 1. Stockholm 739 48,9 37 31,6 2. Malmö 227 15 16 13,7 3. Uppsala 177 11,7 8 6,8 4. Göteborg 110 7,3 11 9,4 5. Umeå 73 4,8 7 6

YEAR OF REGISTRY

1995 2 1996 0

1997 3

1998 4

1999 2

2000 7

2001 0

2002 7

2003 6

2004 5

2005 4

2006 11

2007 10

2008 12

2009 13

2010 19

2011 12

Magicka, Arrowhead

0 5 10 15 20 (The data is based on registration year of active companies, though a company may have been founded or active before then)

Game Developer Index 2011 | 12 GAME DEVELOPER MAP

STOCKHOLM Might and Delight A Different Game Sweden Mojang Active Media Group Movinto Fun Arcadelia Ngmoco Sweden Avalanche Studios Paradox Interactive LULEÅ Bajoum Pixel Tales Velcro Interactive Bitsquid Pixeldiet Entertainment Contentgarden PlayCom Game Design DDM Europe Polarbit DICE Quel Solaar SKELLEFTEÅ Expansive Worlds Raketspel Arrowhead Fabrication Games Semionetix Fatshark SimWay Filimundus Spearhead Entertainment UMEÅ G5 Entertainment Spelagon Coldwood Interactive Hidden Dinosaur Spelkultur Sverige Dohi Sweden Interactive Productline Stardoll Ice Concept Studios King.com Tomorroworld Level Eight Liquid Media World of Horsecraft Oryx Simulations Turborilla Zordix

SKÖVDE Mandibol Entertainment SUNDSVALL Coffee Stain Studios Pieces Interactive Corncrow Games Colossai Studios Piktiv Digimundi Shortfuse Games Immersive Learning Stunlock Studios Lockpick Entertainment Triolith Entertainment FALUN AE Interactive Studios Deadbug Games Megafront Tension LIDKÖPING Tenstar BORLÄNGE SimBin Communisport

UPPSALA TROLLHÄTTAN Aniware Bearded Ladies Doctor Entertainment Game-Hosting GH Hansoft KÖPING Imagination Studios Legendo MachineGames Sweden LS Entertainment 1337 Game Entertainment Pikkotekk MindArk Design STRÄNGNÄS Starbreeze EPOS Mindshed Primus Appus Free Lunch Design Outbreak Studios Hello There Räven AB NORRKÖPING Image & Form Games Goes International International

HELSINGBORG VISBY Localize Direct Three Gates Pixelbite Zeal Game Studio MALMÖ Planeto MOTALA Binary Peak ProCloud Code Club LINKÖPING Blastdoor Interactive Redikod Boldai Illusion Labs SouthEnd Interactive Donya Labs Imperial Games Studio Spelkultur Malmö ManagerZone Junebud Starvault Power Challenge Leripa Swedish Game KARLSHAMN Development Mandelform 12 O’Clock Studios Ubisoft Massive Ozma Custom Red

REVENUES OF with the type of game and payment networks for gaming. Although model considered – a game in which Facebook has more Japanese users FREE-TO-PLAY each user on average plays much than Gree, the latter has more King.com is the world’s second largest longer than gaming sessions for social . There is no longer any doubt developer of social games, ie games games – Easy’s users may spend more that you can make money on free-to- on Facebook or similar social net- time in total. play games. The question is rather how works. The company has developed it works, and what standards are over 150 titles with an approximate According to a recent report from available to account for the impact user base of 50 million players each Japanese Enterbrain, expected when traditional sales with packaged month. King.com has focused more revenues of games on social networks goods do not take place. on Facebook since 2010, but also will rise from 2.6 billion USD in 2011 publishes its games on mobile phones, to 3.4 billion in 2012. Unlike Western BENCHMARKS its own website and various internet markets, it is not primarily Zynga and There is a countless number of ways portals. Since the games are free-to- games on Facebook that accounts for how to measure the revenues of a play, revenue is primarily generated for the increase, but rather games for free-to-play game. In addition, many through micro transactions. Facebook social networks on mobile phones. A developers have an internal system for has over 955 million users, nearly one- majority of the forecasted increase is how to do this, while they rarely seventh of the world population, and attributed to games on a free-to-play comment on monetization, which is a perfect target audience for casual hampers a general estimation. This is games since the users have already nonetheless an attempt to collect some established themselves digitally in an of the most common and powerful online community. means of measurement as an indication of the popularity and Free Lunch Design has developed two revenues of free-to-play. distinct titles for Facebook, Icy Tower and Hello Adventure. The latter was A common denominator of many free- nominated for the 2012 Golden Joy- to-play titles is a focus on the number stick Awards for Best Browser Game. of registered users and how many of Icy Tower has in turn been played by them daily or monthly play a particular 20 million users on social networks game. This serves as a benchmark for and enjoys over a million users each potential advertising revenues, if month. advertising is the model at play. model, generating revenues from Another important factor is the gamers Although King.com’s numbers impress, consumers who pay for premium that pay for more content, which can it is difficult to compare statistics content; in-app purchases that extend be measured in Monthly Average between different types of free-to-play and/or enhances the gaming Revenue per Paying User. You can also games. Free-to-play is in itself not a experience. In Asia, there are more derive revenues generally amongst genre and can be as varied as any social networks in use than on Western both paying and non-paying users by other game. Easy Studios’ Battlefield markets, where Facebook is dominant. measuring Monthly Average Revenue Heroes has 13.5 million registered It is also important to distinguish per User. users, a small figure compared to the between the most popular social user base of King.com or Stardoll, but networks and the most popular social

Bild: Hello Adventure, Free Lunch Design

INDUSTRY EXPERTS # 2 2013 will be a transitional year for many social and free-to-play game companies. A lot of developers and publishers, including Free Lunch Design, are moving from the web to focus on smartphones and tablets. The majority of the App Stores top grossing apps have already shifted from premium to freemium. The biggest Facebook developers along with the largest Japanese social networks are pushing headfirst into the western mobile market. The biggest challenges will be game discovery and how to handle escalating user acquisitions costs. At Free Lunch Design, we are working with our biggest inhouse IP’s (Icy Tower and Dark Nebula) for iOS and Android. We’ll work with both freemium and premium as business model. In combination with our own social media campaigns we will partner with relevant advertising companies to maximize the launch and its “burst” effect on the App Store charts. - Magnus Alm, CEO, Free Lunch Design

Game Developer Index 2011 | 14 •Total registrations and revenues of campaigns. Payments eCPM •MAU – Monthly Active Users to the publisher/developer of a game •There are two banners: ”Apps” and •DAU –Daily Active Users are then based on views per thousand ”Games” •MARPU – Monthly Average Revenue people. •The publisher earns $ 1 per click. Per User •Both banners were published for the •MARPPU –Monthly Average Revenue CPM duration of one week Per Paying User •Total cost for running the ad is $ •”Apps” was viewed by 5000 visitors 40,000 from which 50 clicked on it Comparisons between different plat- •The total estimated audience is •”Games” was also viewed by 5000 forms or social networks is still difficult 5,000,000 people visitors from which 115 clicked on it because developers sometimes use •CPM is calculated as: (40 000/5 •”Apps” has an eCPM of $ 10 in-house systems for measuring unique 000 000)*1000 = $ 8 per thousand (50/5000*1000) visitors, and have different definitions views •”Games” has an eCPM of $ 23 of what constitutes a ”unique” visitor. (115/5000*1000) Choosing a CPM campaign over a To simplify, one can say that there click-based ditto may be done for a Games which in these cases act as are essentially two sources of income. number of reasons. It has usually to do advertisement space are thus given One is through ads that appear with the kind of media in use and the money by the advertiser per thousand within the games, in loading screens or nature of the ads. In many cases, it is impressions depending on the above, menus. In those cases, DAU is a good more appropriate that someone just and in some cases, other variables. benchmark that gives an indication of sees and ad rather than clicks on it, how many users play daily. The other especially in video games. source is the consumers who pay for NEW SERVICES, subscription fees or micro eCPM (Effective Cost per Mille; transactions for premium content. This NEW PIRACY effective cost per thousand ad Digital services are sometimes can be measured by MARPU and impressions) is used by developers as considered to have less risk of piracy, MARPPU, ie how much revenue a user a benchmark to compare what effect and there are certainly advantages on average generates monthly. a CPM ad would have given were it over physical distribution that is easily a Cost per Click (CPC) or Cost per subjected to unauthorized Another measurement that may come Acquisition (CPA) campaign instead, dissemination through file sharing or in handy for ad-based free-to-play is in order to focus on the form that pirated discs. But, even digital services eCPM. CPM (Cost per Mille; cost for a generates the best revenue for the time can be exposed to various types of thousand ad impressions) is a bench- being. intrusion and unauthorized use, even mark long used for advertisement in if it is usually a case of hacking or radio, television, newspapers, and the trademark infringement rather than web; for calculating the profitability copyright infringement. Examples of

Bubble Witch Saga, King.com

15 | Game Developer Index 2011 INDUSTRY EXPERTS #3 When I joined the industry in the mid 90’s it was said Sweden had great engineers but lacked in art and game design. These days Sweden clearly is one of the most vibrant and multifaceted areas in the world for game de- velopment and publishing featuring and amazing range from some of the best AAA-studios to some of the world’s biggest social games to some of the most successful indie games. I am very grateful being at Stardoll, which I consider to be one of several great examples of the fact that the Swedish game industry will prevail by continuously adapting to the increasingly rapidly changing landscape of computer games. In the next year we are going to see a lot of the old truths in our industry being questioned and new innovative games and businesses will spring up thanks to new platforms like and slowly the establish- ment of “smart TV’s” and new business models like streaming games rented by the hour and the second generation of free to play games. It’s going to be very exciting and I feel blessed to be smacked in the middle of it all. - Tobias Sjögren, VP, Mobile Games Business Development, Stardoll this are fake websites that sell accounts a publisher, for royalty advances that through physical distribution, the to popular games, hacked user constitutes the development budget, actual sales tend to be four to ten times accounts, pirate servers for online having the publisher responsible for greater. In addition, international games and hacked credit card details. marketing and distribution. The business groups account their revenues Paid apps on mobile marketplaces are developer’s revenue is then only a in different ways that further also affected, though more by fraction of the consumer’s investment. complicates a fair assessment. traditional file sharing via established Today, developers adhering to this torrent and bitlocker services. Several business model are commonly owned game developers have testified in by a publisher. Digital distribution is on FUTURE international press about how logins the other hand characterized by low That the Swedish video games industry on their mobile servers are many times prices (often free-to-play or freemium), in the coming years is endowed higher than the number of actual apps low volumes and low investment costs. with another sensation of Mojang’s sold, confirming the picture. Digital The developer either sells the games proportions is not very likely. Even services thus have many advantages directly to the audience or goes so, everything indicates that Swedish for game developers, but it is no final through an intermediary, such as game developers will continue to grow solution to the problem of unauthorized Steam, GamersGate, App Store, in 2012, the already biggest usage. Google Play, Xbox Live Arcade and developers in particular. A selection: others. The middleman usually takes DICE has since launched 30% of revenues, and normally does and continues to work on related DLC, THE VALUE CHAIN not contribute with investments in Starbreeze is developing a down- There are basically two main value communication. loadable game with filmmaker Josef chains for video games: physical and Fares, Mojang has released Minecraft digital distribution. The former include This report studies developer revenues, on Xbox Live Arcade, smashing games sold at retail or via mail order, but that should not be confused with previous records on the platform, on discs or other physical storage the value of a game’s total sales in the Angry Birds developer Rovio has media. This distribution model is based value chain. For game developers opened a branch office in Stockholm, on high prices, high volume, high operating in the digital value chain, Ngmoco Sweden develops free-to-play development costs and large most of the consumers’ payments are games for Japanese DeNA Mobage’s investments in marketing. The game visible in the company’s annual report, social gaming platform, Fatshark is developer typically assigns the rights to but for those who sell games mainly releasing its first mobile game, and

This pyramid examplifies how King.com divides its audience by different revenue models. Everyone playes the same game, but different approaches are required to make it profitable. HEAVY • Heavy player: The most ardent and skillful players gather at the top of the pyramid. PLAYER They play for the sake of challenge and participate in various tournaments.

• Paying player: These players do not want ads in their games. They buy virtual items to PAYING PLAYER facilitate or enhance the gameplay.

• Average player: The majority of players assemble at the bottom of the pyramid. They are casual gamers who want to play for free and thus generate revenue AVERAGE PLAYER through ads.

Game Developer Index 2011 | 16 NORDIC COMPANIES NORDIC TURNOVER NORDIC EMPLOYEES Denmark (2012) 83 Denmark (2010) 51 Denmark (2010) 578 Finland (2011) 75 Finland (2011) 165 Finland (2011) 1300 Iceland (2011) 10 Iceland (2011) 50 Iceland (2011) 470 Norway (2011) 35 Norway (2009) 30 Norway (2011) 200 Sweden (2011) 117 Sweden (2011) 257 Sweden (2011) 1512 Nordic Total 320 Nordic Total 553 Nordic Total 4060 N:o of companies M Euro N:o of employees

recent start-up Machine Games is in self-publish via App Store and Google digital services rather than physical full swing to develop new AAA titles. Play. Paradox Interactive and Mojang products is a mantra well-consistent Additionally, Southend Interactive has are two well-known examples who with reality. The strongest driving factor begun the development of the recently have successfully self-published their for the international industry’s growth announced Sacred Citadel, a spin-off games. Distribution services typically will be mobile gaming. PwC estimates title in the Sacred series, which now take a percentage of profits or a lump that 2.9 billion people will use their awaits its third iteration. The game will sum to publish a game, where mobile phones for internet access in be released on PSN, XBLA, Steam and additional costs may apply if the game 2016, of which one billion in China other digital distribution services. is prepared extra space in various alone. A doubling in just five years. marketing campaigns. A likely scenario is that more and more Cisco predicts that global internet traffic game developers will self-publish in the The employment within the Swedish will quadruple by 2015, with a CAGR future. In Britain, 70 percent of those games industry is also expected to of 32 percent (2010-2015). Global in- who do not self-publish their games increase. Paradox Interactive intends to ternet usage in 2011 consisted of over (27 % of the total) claim they will do hire nearly 70 people during 2012- 2.2 billion people, compared to about so in the future (State of the UK Video 2013. Online-focused Paradox North 1.1 billion in 2006 (ITU). It is thus no Game Development Sector 2010). will employ about 50 of these, and wonder that free-to-play and online/ Paradox South estimates 10-20 new browser-based gaming has quickly job opportunities. In the meantime become popular among consumers King.com opens an office in Malmö and the developers and distributors and employs nearly 150 people. who have found ways to monetize this wave of new games. In addition, half Avalanche Studios is working on no of the population of the world’s less than three parallel AAA developed countries had an active productions based on both licenses internet subscription for their mobile and original IP. Mojang also has its phones in 2011. Furthermore, Cisco sight on the future, currently working believes that the percentage of Wi-Fi on fantasy card game Scrolls along- and other wireless internet access on side the enigmatically titled space mobile phones will exceed wired game 0x10c. Minecon 2012 takes devices in 2015. This reflects the place in Paris. markets where smartphones constitutes the bulk of a consumer’s internet usage, not least in China and WORLDWIDE Japan. Emerging economies are International predictions say that the generally synonymous with emerging industry will continue to grow at about video game markets, as seen in Brazil 7.2 percent annually until 2016 (PwC and India. – Global Entertainment and Media Outlook 2012-2016), to a total value Along with the U, new versions of According to a study by the European of approximately 83 billion USD PlayStation and Xbox are expected Games Developer Federation (consumer expenditures). Driven by over the next few years. The current (European Survey 2012) worldwide broadband development, generation of consoles has been 34 percent of concerned develop- digitally distributed games are growing unusually long and during the first ers currently self-publish. Several of rapidly by approximately 15 percent years of the coming generation, the recent mobile game developers per year until 2015. That gamers buy developers once again have the

Pic: IV (in development), Paradox Interactive

17 | Game Developer Index 2011 opportunity to establish new AAA capture and animation studio Games by ZeniMax Media. Moreover franchises. At the same time, console Imagination Studios is other than both Rovio and Ngmoco are manufacturers have the chance to Uppsala locally represented in London establishing offices in Stockholm. rekindle an interest in their respective and Belgrade. App developer G5 Meanwhile, Power Challenge, digital marketplaces, with lessons they Entertainment is headquartered in developer of sports-based online have learned over the past years. Stockholm with marketing offices in games, has in addition to the branch The trend towards digital distribution the US and development offices in in Linköping, offices in London and has improved turnover and profits, Moscow and Ukrainian Kharkiv. New York. primarily by attracting new audiences Online developer Stardoll has besides to gaming. The trend is expected to its Stockholm headquarters also offices King.com is a global company in the continue as more variety and greater in the US, UK, France and Germany. truest sense. The developer has in diversity becomes apparent in content addition to its Stockholm office and and distribution methods. Game developer-oriented agency emerging Malmö studio branched DDM has in addition to the head- out to London, Hamburg, Barcelona, INTERNATIONAL quarters in American Northampton Milan, Malta, Bucharest, and San and its Stockholm office, local Francisco. EXPANSIONS establishments in Boston, San Fransico, The video games industry becomes Manchester and Osaka. Both increasingly global and clients and Avalanche Studios and Paradox customers of Swedish developers have Interactive have offices in New York. long since existed on export markets. Several of the bigger Swedish Similarly, foreign companies have seen companies have in line with this the potential of Swedish developers chosen to increase their presence in and either opened up offices in the other countries. Online games country or acquired local studios. DICE developer MindArk has besides its is owned by , Massive office in Gothenburg offices in both Entertainment by Ubisoft and Machine Singapore and Mexico. Motion

INDUSTRY EXPERTS #4 I think we’ve seen an upswing for Indie games, and I think that’s something that will grow stronger in the near future. The big AAA titles and MMO’s are having a hard time; they can’t be as sure of what will actually make a profit any longer. Smaller games are a lot less risky, which is good for both the developer and the player, as that allows for much greater creativity. Thanks to digital distribution that area of the industry will continue to grow as niche games continue to reach their target groups a lot easier. Over the next twelve months I hope to hear more regarding the next generation of consoles. My wish is that they will have solved the diplomacy around being able to sell games online on consoles as well. Afterall, who needs more boxes taking up more space at home? A few collectors’ editions, sure, but the life of a gamer would be so much easier if we could just download and store the games digitally. - Linda Kiby Producer, Paradox Development Studio

Bloodline Champions, Stunlock Studios

Game Developer Index 2011 | 18 GAME SALES enrich the list. Sales figures are Of Minecraft’s approximately 9 million gathered from annual reports, copies sold, 6 million consists of the Below is a selection of Swedish from information directly from the PC version. bestsellers in the last decade. The developers and publishers, as well compilation still lists several older retail as third party sources such as NPD games, but as the sales figures for or VGchartz. “Released” refers to the digitally distributed titles become year of release and “Data” shows from known, more and more of those will which year the information was taken.

TITLE DEVELOPER SALES RELEASED DATA Battlefield 3 DICE 15 000 000 2011 2012 Battlefield: Bad Company 2 DICE 12 000 000 2010 2012 DICE 11 000 000 2005 2011 Minecraft Mojang 9 000 000 2010* 2012 DICE 3 000 000 2002 2004 Battlefield: Bad Company DICE 2 320 000 2008 2010 Mirror’s Edge DICE 2 000 000 2008 2012 Just Cause 2 Avalanche Studios 1 500 000 2010 2010 DICE 1 444 000 2009 2010 Battlefield 2: Modern Combat DICE 1 330 000 2005 2010 Just Cause Avalanche Studios 1 300 000 2006 2010 Magicka Arrowhead 1 300 000 2011 2012 The Darkness Starbreeze 1 137 000 2007 2011 DICE 1 000 000 2004 2004 DICE 900 000 2002 2006 World’s Scariest Police Chases UDS 800 000 2001 2010 Headhunter Amuze 700 000 2001 2010 Rearmed Grin 699 000 2008 2010 The Chronicles of Riddick: Assault on Dark Athena Starbreeze 691 000 2009 2011 World in Conflict Ubisoft Massive 650 000 2007 2010 Terminator Salvation Grin 620 000 2009 2010 Krakels ABC: Det magiska äventyret Pan Vision 608 369 1999 2010 Krakels ABC: Storm över Allemansland Pan Vision 608 369 1998 2010 Backpacker 2 Aniware 600 000 1997 2010 Bionic Commando Grin 550 000 2009 2009 Payday: The Heist 520 000 2011 2012

*Beta version

19 | Game Developer Index 2011 AVERAGE REVIEW gaming media all across the world. a system in which some media’s score The rating serves as a more has greater impact on the Metacritic SCORES or less standardized industry measure score. Listed below is a selection of Swedish-developed video games are of a game’s qualities. The Metacritic Swedish games from 2002 and not only worthy of attention for their database collects ratings from a variety onwards. high sales. Several titles have over the of media and publications in several years received excellent reviews from different countries. Unlike traditional average rating systems, Metacritic uses

TITLE DEVELOPER METASCORE PLATFORM YEAR Minecraft Mojang 93 PC 2011 Battlefield 3 DICE 89 PC 2011 Magicka Arrowhead 74 PC 2011 Hamilton’s Great Adventure Fatshark 77 PC 2011 Southend Interactive 81 2010 Amnesia: The Dark Descent Frictional Games 85 PC 2010 Battlefield: Bad Company 2 DICE 88 PS3 2010 Just Cause 2 Avalanche Studios 84 PC 2010 Puzzle Dimension Doctor Entertainment 83 PC 2010 Battlefield 1943 DICE 84 Xbox 360 2009 3 Paradox Interactive 77 PC 2009 Southend Interactive 76 Xbox 360 2009 Mirror’s Edge DICE 81 PC 2009 R-Type: Dimensions Southend Interactive 76 Xbox 360 2009 The Chronicles of Riddick: Assault on Dark Athena Starbreeze 82 Xbox 360 2009 Battlefield: Bad Company DICE 84 PS3 2008 Bionic Commando: Rearmed Grin 87 PS3 2008 GTR Evolution SimBin 83 PC 2008 Europa Universalis 3 Paradox Interactive 83 PC 2007 Race 07 Official WTCC Game SimBin 83 PC 2007 The Darkness Starbreeze 82 Xbox 360 2007 World in Conflict Ubisoft Massive 89 PC 2007 GTR 2 FIA GT SimBin 90 PC 2006 Race: The WTCC Game SimBin 81 PC 2006 Battlefield 2 DICE 91 PC 2005 GTR FIA GT Racing Game SimBin 85 PC 2005 Hearts of Iron 2 Paradox Interactive 83 PC 2005 Ground Control 2 Ubisoft Massive 80 PC 2004 Rallisport Challenge 2 DICE 87 Xbox 2004 The Chronicles of Riddick: Escape from Butcher Bay Starbreeze 90 PC 2004 Battlefield 1942 DICE 89 PC 2002 Rallisport Challenge DICE 87 Xbox 2002

The listed Metascore were read on 1 September 2012. For more information, please visit: http://www.metacritic.com.

Game Developer Index 2011 | 20 INNOVATIONS IN and crowdfunding (users contribute Throughout the years, acclaimed funding) also occurs in the world of games like , MARKETING video games. , , Limbo, This report shows how the established and Amnesia: The Dark Descent have physical distribution channel is being Humble Indie Bundle is an initiative been included. Swedish developers overshadowed by the growing market launched in 2010 by the American that have participated are Mojang, for digital services. It is nonetheless independent game developer Wolfire Oxeye Game Studio and Frictional worth pointing out that the latter, in Games, now managed by Humble Games. many cases, covers another kind of Bundle Inc. It consists of a series of gaming experiences than the video game collections, or “bundles”, Steam has also released Indie-centered physical market. Mobile games are that are on sale for a set amount of bundles, although its most famous very different in design, scope, and time. A number of independent campaign is likely the Steam game mechanics than a typical game developers typically participate with Summer Sale. Apart from a number for consoles; compare Battlefield 3 one game each and the bundles are of Indie and AAA games that receive with Minecraft to take an example then sold by the motto of “pay-what- temporary price reductions, users can among the recent Swedish successes you-want”. The buyer may thusly participate and vote for the games in respective channels. Franchises like decide how much he or she wants they want to give a price-cut for one Battlefield, which exists in in both AAA to pay for a certain collection and day of the campaign. Valve’s Gabe and casual versions, has a distinctively Newell has repeatedly commented on different design in the different the importance of a continued price channels. is the experimentation on digital channels. free-to-play online version of Battlefield and has a more playful, less realistic , the most talked-about style than Battlefield .3 There is only in crowdfunding platform in gaming certain digital sales that the games are circles, is a relatively new phenomenon the same as in physical distribution, to the general public. Crowdfunding such as parts of the supply of online allows potential users to co-finance stores like GamersGate. a project in its development stage. A project’s fund raising phase Digital distribution enables innovation typically runs the course of one month. on multiple levels, beyond matters of A famous example of Kickstarter-proj- game design, not least in regards to then divides the investment into three ects is Adventure. Double marketing and finance. By keeping in categories: Developers, Humble Indie Fine (, Brütal Legend, touch with the audience through forums Bundle Tip, and Charity. An invest- Stacking) announced its desire to and social media, game developers ment of $ 20 may for example be develop an old school may involve gamers in the develop- divided by 10 to the developers, 5 to on 8 February 2012. The funding ment process, which companies like the service itself and 5 to the various target was set at $ 400,000. Private Paradox and Mojang successfully charities. turned out well, co-financiers, known as leveraged to gain both loyal users and both financially and publicity-wise. “backers”, were encouraged to make ambassadors who can to help spread In August 2012, the fourteen then- an investment according to different information about the company and its released bundles had generated over intervals with the promise of equivalent games. Popular phenomena such as $ 19.5 million in revenue. future rewards. Backers are typically crowdsourcing (users create content) encouraged to be active during the

Pic: Super Meat Boy, Team Meat INDUSTRY EXPERTS #5 The coming year will be very exciting as we get to see how the tablet market develops and positions itself in relation to the PC and Smart TV. We will also see more “ubiquitous games” that can be played with and against each other across multiple platforms. Sony’s acquisition of Gaikai reinforces my belief that we will soon see the last console generation, and what we then see is that the screen turns into a console. The power struggle between , Sony and Google (Android) will be exciting to follow since it will go a long way in determining what future gaming platforms and business models will look like. Nintendo is faced with a defining year with the release of the , and the likelihood that they are shifting towards becoming purely a software company gets bigger and bigger every year. Talking about business models, free-to-play will to continue to grow, but pay-and-play games will also move over to a more service-oriented business model with more small releases instead of one or a few major updates, which will result in the business models being closer to each other. At Paradox we see a very positive trend towards streaming, download, and free-to-play as this has so far led to more competition and a wider range of consumers. 2012 has been a year of consolidation with approximately 15-20% growth for Paradox, but we look forward to another crazy year of growth in 2013 with about 50% growth in both turnover and profit. - Fredrik Wester, CEO, Paradox Interactive

21 | Game Developer Index 2011 development stage in the respective Other than a mean to raise money, METHOD project’s forums and generally receive crowdfunding is an excellent way to This report is based on a compilation a greater insight into the process than predict how much interest a game will of annual reports from the Companies the average stakeholder. In Double see in the most hardcore players. Registration Office’s Enterprise Fine’s case, backers who paid at least Campaigns in Kickstarter and other Records, including companies that $ 15 were offered a digital copy of the crowdfunding platforms are spread have or game when it eventually launches. This mainly from user to user via social specialized middleware as a was followed by intervals of 30, 60, media and word of mouth. significant part of their operations. 100 and all the way up to $ 10 000. Companies mainly focused on poker, The rewards are often creatively and gambling or casino games are not personally designed. In this case, you CONCLUSION included. The method has several could get a portrait of yourself drawn 2011 was the best year ever for shortcomings: other types of corporate by the game’s designer, autographed Swedish game developers. The success structures than joint-stock companies posters, a deluxe edition of the game, can partially be attributed to the rise of (Swedish “AB”) fall outside the scope, and for the more affluent speculators: digital distribution, gone from potential as well as companies operating in lunch with the developers. On March into tangible reality. Another reason Sweden but are registered in another 13, it was clear that the project had is that new audiences have opened country. Therefore, there is a grey zone exceeded its goal and raised no less their eyes to gaming – female gamers of game developers not included in this than $ 3,300,000 from over 87,000 have grown substantially in number report that would have provided backers (who are refunded for projects over a couple of years. The third and slightly higher numbers to all key that do not reach their goal, but are single most obvious reason is that figures disclosed. The strength of this not refunded for initiated projects that individual companies have progressed method is that the basis is audited get cancelled). Double Fine Adventure remarkably. Mojang with Minecraft and publicly approved by authority is expected to launch during Q2 of is perhaps the most famous example, officials. 2013. Projects that far exceed their but King.com and Stardoll have also specified objectives often expand their grown substantially, and DICE released There are also problems with non- plans for the game’s design in the much awaited and successful game-related parent companies; more progressive tiers as the budget Battlefield .3 Other heavy industry specifically when the subsidiary’s increases. For example, a game that players like Paradox Interactive, game developing operations are reaches 20% above its target can Avalanche Studios and Massive recorded in the owner company’s promise more levels and content, and Entertainment continue to have a accounts, making it indiscernible for if it reaches 40%, a new story arc etc. strong position. Several newer mid-size companies have also enjoyed a the Game Developer Index. A problem shared with most trade associations. Following Double Fine’s successful splendid development, perhaps most and medially renowned campaign, a clearly Fatshark and Tarsier. In cases where annual reports were stream of inspired developers unavailable, the previous year’s figures submitted their own projects to Thanks to the amplitude of the of turnover, profit and employees were Kickstarter: a sequel to cult game Swedish industry’s success, developers used. These companies are: SimBin, LS , Swedish Three Gates’ are well-poised for the future, and by Entertainment and AE interactive. Legends of Aethereus, and console all accounts 2012 will mark another record year. Major limitations of the project Ouya are some successful The annual reports are in SEK, but for translation examples. It remains to be seen how favorable development are the purposes the currency has been converted into the first wave of Kickstarter-funded availability of skilled personnel and Euro. One Euro was considered to be worth capital investments. 9 Swedish Krona (SEK), as this was the game projects will fare on the regular approximate average exchange rate during 2011. market.

Swedish Games Industry is a Jacob Kroon Dataspelsbranschen Swedish Games Industry partnership between MDTS and Information/Analyst Klara norra kyrkog 31, Box 22307 Spelplan-ASGD. For more information, [email protected] SE-104 22 Stockholm please visit: www.dataspelsbranschen.se

www.swedishgamesindustry.com. Per Strömbäck Spokesperson [email protected]

Game Developer Index 2011 | 22